The VM is native on the Windows machine and there's zero latency. Not that I've ever detected, anyway. I've been using this setup for 5 years.
I suspect it helps to remove shitty window managers like Unity or Gnome3 and go to something more basic like xfce. I just set up an example Ubuntu VM today. Unity is annoyingly laggy. My primary VM with xfce is fine.
Two years ago I was using VMware in W7, but ended up dual booting Linux since the lag was so annoying.